15 June 2012

  • 6-18-2012

15 JUNE 2012





In our report of 14 February 2012 this year, we foreshadowed a 15% return of capital to all

investors, outlined our strategy for managing the Fund into the future, and reaffirmed our two

long held goals of returning the value of a Fund Unit to $1, and unfreezing the Fund.

We pointed out that the success of this strategy depended on the proposition that there would

be no further significant loan impairments.

Investors have now received their 15% capital return, which has reduced the funds under

management to $123 million. This is from a Fund high in 2008 of $330 million.

We have previously advised you that two major borrowers had defaulted on their loans and

legal action was being taken to recover the amount owing. At that time, we explained that

there could be future losses to be incurred, if these defaults were not rectified. To date, these

loans remain in default.

We have recently commissioned formal valuations in respect of all property held as security

on these non-performing loans. Unfortunately, the valuations are lower than previously

provided, and have resulted in the need for further loan impairments.

While these new impairments have not reduced the value of Fund units, currently 97cents, the

result has been a further deferral in re-commencing income distributions. The impairments

have also had the effect of delaying the return of the value of a Fund Unit to $1.

We have now carried out extensive loan book analysis, cash flow projections and possible

Fund modelling, to establish the best way to manage the Fund while ensuring the best

outcome for investors. The continued detrimental effect of the GFC on regional property

markets has placed extreme stress on the Fund’s operations, as it has not been possible to sell

assets held as security. As the funds under management decrease, the effect of nonperforming

loans increases, putting further pressure on profitability.

We believe that the Fund will not be able to unfreeze in the foreseeable future and realise that

investors need certainty and clarity concerning the future of the Fund.

As a result, we have now reluctantly decided to wind down the Fund. This will take

considerable time to achieve, as there will be no “fire sale” of property held as security.

In the meantime, the only new loans that will be advanced will be to balance the loan book

with liquidity needs so as to maximise the income of the Fund. We will maintain a policy of

minimum quarterly returns of capital to investors, which will increase as loans are repaid.

The Fund has now operated for some 44 years, providing an important service to both

investors and borrowers. Funds like Mayne have been an integral part of regional

development finance, and it is sad that this era will come to an end.

I take this opportunity to thank directors, management and staff for their hard work and

dedication, particularly since the freezing of the Fund in 2008. I am sure you will understand

that there have been many challenges to face.

For some time now, I have been planning my retirement, and it is with a sense of sadness,

that I advise that 27 June 2012, will be the day. I have complete confidence in the remaining

directors Kevin McGregor, who will succeed me as Chairman, Steve Connelly, Michael Shay

and Pat Rummery, to continue to manage the Fund professionally and with the interest of

investors as their prime objective. Please give them your continued support.

I have enjoyed the “Mayne Journey”, but would have preferred a happier end to my

association. I personally thank investors for their patience, in what has been a difficult and

challenging time for us all. I especially thank those of you, who have expressed your personal

support for directors, management and staff, since the freezing of the Fund in October, 2008,

notwithstanding the financial disruption you may have experienced.

Finally, I offer my best wishes for a successful and orderly wind down of the Fund.




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